4 The European digital market The European digital market for music in 2009 was valued at over 604 million - in average 15% of the overall market. Currently over 260 unique services in Europe, and over 11 million tracks licensed. In 2009, close to 1 billion legal downloads in the EU. The increase in digital market does not compensate for the sharp decline of the physical market. 4

5 New digital services in Europe The record companies aim is to license music via as many different channels as possible, as long as they are commercially viable and legitimate. Currently over 260 unique services in Europe, and over 11 million tracks licensed. Many different formats: tracks or albums from download stores subscription services music bundled with devices mobile apps for music listen to music through streaming services for free or though subscription Many different business models: platforms, bundled offers, ISP services 5

6 Some exciting new services Nokia Comes With Music offers consumers unlimited music bundled in the cost of their devices and is now available in over 20 countries. Sony Ericsson has also launched a similar service, PlayNow Plus, and now operates in many EU countries. Swedish-based Spotify and French-based Deezer: advertising-supported services that offer music streaming at no cost to fans. More than seven million users across six countries have signed-up to Spotify. In Sweden, more than 10% of the population now uses Spotify. However, the growth of Ad-supported is not a sustainable model in itself and these services now need to migrate consumers to a paid-for subscription model. TDC PLAY in Denmark and Sky Songs in the UK : first examples of music services run by ISPs. TDC offers its broadband, mobile and cable customers unlimited music streaming of a catalogue. Sky Songs offers unlimited music streaming of more than four million songs. There are many others. A full list from across Europe can be found at 6

7 The music business in Europe The European market is the largest market, worth 4.2 billion in That is nearly 1 billion ahead of the US and accounts for over a third of global sales (36%). National repertoire represents a large share (almost 50%) of the market in many EU countries however, this is changing. European artists top the global rock and classical sales charts. These last years, global best-selling European acts included Coldplay, U2, Andrea Bocelli, Muse, Robbie Williams, Lily Allen, Leona Lewis, etc. However, the music market is declining sharply. From 2001 to 2009, the European music market fell by 41% in value. 7

8 The decline of music sales in Europe From 2001 to 2009, the European music market fell by 41% in value. Despite the music industry embracing digital content and distribution, physical music sales have halved during this period, with digital sales growing at too slow a pace to offset this drop. 8

9 The impact of copyright infringement Steve Jobs once said that itunes biggest competitor was piracy. 20 billion illegal downloads - 1 billion legal downloads. The new digital services are undermined by the presence of illegal content and are not able to perform anywhere close to their full potential. Today, 65% of the music piracy problem comes from P2P. The rest comes from websites, mobile piracy. Many platforms have decided not to operate in certain markets as these aren t viable due to the amount of illegal content. The platforms cannot gain a foothold and get to the consumers. Piracy is exhausting the legal offer and does not create a viable Digital Economy. 9

10 National Impact of Piracy FRANCE third biggest music market in Europe and fifth largest in the world fell by 48% between 2001 and new artist signings in 2009,compared to 171 in 200. SPAIN music sales slumped to one third of their level of % of music acquired on line is pirated. Illegal file-sharing in Spain is twice the average level in Europe 10 domestic new acts would have been signed per year by a major music company five years ago, today only around are signed every year. Not one Spanish artist in the top 50 in Markets like Italy and Spain with the highest incidence of file-sharing are also those with weakest per capita music spending. 10

11 Job and Economic Losses Losses of revenues for the music sector, loss of tax revenues and jobs, less investment in new talent, and ultimately less choice and diversity for consumers. This is not just about music. The crisis is affecting film, TV series, music, software, newspapers and all other creative sectors, as well as their workers. These are jobs that would otherwise be safe, in a sector accounting for close to 7% of the EU s GDP. The industries employ over 14 million people. Tera Consultants projected the loss of 1.2 million European jobs by 2015 in creative sectors most affected if action is not taken to tackle piracy and said 185,000 jobs and 10 billion in revenue were lost to piracy in billion in revenue for Europe could be lost by Trade unions have started speaking out about the issue because they realise that a significant number of jobs are at risk.

12 The industry response Legal offers Education campaigns Litigation Against operators/facilitators:napster, Grokster, Kazaa, The Pirate Bay Cases against thousands of individual P2P users civil and criminal Cooperation from Internet service providers: ISP cooperation is a more efficient and effective method than thousands of legal actions against individuals One way for ISPs to assist in stopping piracy on their networks is by sending warning notices to infringers and applying a consequence for repeat infringers

13 Education what are we trying to do?

14 Putting the case to governments and media

15 Links to over 400 legal music services worldwide Europe.php

16 Young People, Music and the Internet

17 Copyright and Security Guides for employers and colleges English Italian ht-guide-2005.html

18 Awareness levels in Europe % of people who are aware of illegality of file-sharing 90% 80% 70% 68% 71% 79% 64% 70% 60% 50% 40% 30% 20% 10% 0% UK Denmark Germany France Total Q: As you may know, there are technologies available on the internet that individuals can use to distribute or share music from their computer to other people for free. From what you know about the current laws, is it legal/illegal? Source: GfK, May 2004

19 Education campaigns results? Development and promotion of legal services «Legal» message «Moral» message The risk factor Ultimately, the biggest attraction in file-sharing is the easy availability of free content without risk: «it is there» 19

20 Legislative Solution: a European Approach Just licensing «more» is not the solution the illegal offer of content needs to be tackled in its own right. If no voluntary solutions can be found, legislation will be needed. The music industry favours an approach which combines the information of Internet users, with sanctions for persistent infringers: notices, warnings, sanction(s). For this we need the cooperation of Internet service providers (access providers) 20

21 P2P piracy Graduated response o A majority of P2P use of an opportunistic behaviour, the «lure of free» o Users studies show that people only change behaviour if there is a risk o We need a large-scale response to a large-scale problem o More consumer-friendly approach o We also need solutions for website piracy : e.g. more effective procedures for blocking access to illegal websites 21

22 Conclusions Alternative remuneration/business models? The issue is to give a change to the existing market and business models 22

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